UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of earliest event reported: November 1, 1997
------------------------------------
UCI Medical Affiliates, Inc.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 0-13265 59-2225346
(State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.)
</TABLE>
1901 Main Street, Suite 1200, Mail Code 1105, Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (803) 252-3661
-----------------------
No Change
(Former name or former address, if changed
since last report.)
This document contains a total of 17 pages.
<PAGE>
This Form 8-K/A amends the Form 8-K filed with the Securities and Exchange
Commission on November 5, 1997 by UCI Medical Affiliates, Inc., a Delaware
corporation (the "Company"), and is filed to include the financial statements
required by Item 7 of Form 8-K.
Item 7. Financial Statements and Exhibits
a) Financial Statements of Business Acquired
The financial statements for Marvin Dees, M.D., the business
acquired by the wholly-owned subsidiary of the Company, are
included in this report beginning on page number three (3).
b) Pro Forma Financial Information
The pro forma financial information for Marvin Dees, M.D., the
business acquired by the wholly-owned subsidiary of the
Company, is included in this report following the financial
information herein in response to Item 7(a) above.
c) Exhibits
The following exhibit is incorporated by reference to the
exhibit of the same number filed with the Company's Form 8-K
filed on November 5, 1997.
Exhibit 2.1 - Asset Purchase Agreement executed on
October 31, 1997, to be effective November 1, 1997,
by, between and among UCI Medical Affiliates of South
Carolina, Inc., a South Carolina corporation ("UCI of
SC") Doctor's Care, P.A., a South Carolina
professional corporation ("Doctor's Care"); Marvin
Dees, M.D., a South Carolina resident ("Seller"); and
Landlord (defined as Seller and Katherine R. Dees,
collectively).
<PAGE>
Report on Audits of the Financial Statements of
Marvin Dees, M.D.
as of December 31, 1996 and 1995
<PAGE>
Contents
Page
Report of Independent Accountants.............................................5
Marvin Dees, M.D. Financial Statements
as of December 31, 1996 and 1995......................................6-12
UCI Medical Affiliates, Inc. Pro Forma Combining Financial Statements
Combining Balance Sheet at September 30, 1997...........................13
Note to Combining Balance Sheet.........................................14
Combining Statement of Operations and Accumulated Deficit
for year ended September 30, 1997....................................15
Note to Combining Statement of Operations...............................16
<PAGE>
Report of Independent Accountants
Board of Directors
UCI Medical Affiliates, Inc.
We have audited the accompanying balance sheets Marvin Dees, M.D. (the
"Practice") as of December 31, 1996 and 1995 and the related statements of
operations, changes in owner's equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Practice's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Marvin Dees, M.D. as of
December 31, 1996 and 1995, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The financial statements have been prepared solely from the accounts of Marvin
Dees, M.D. and do not include the personal accounts of the owner or those of any
other operations in which he may be engaged.
Columbia, South Carolina
December 22, 1997
ORIGINAL SIGNED OPINION ON SCOTT, HOLLOWAY & MCELVEEN, LLP
LETTERHEAD IS ON FILE WITH UCI MEDICAL AFFILIATES, INC.
<PAGE>
Marvin Dees, M.D.
Balance Sheets
December 31,
1996 1995
------------------- -------------------
Assets
Current assets:
Cash and cash equivalents $ - $ 33,824
Accounts receivable, net 47,148 49,342
------------------- -------------------
Total current assets 47,148 83,166
------------------- -------------------
Property and equipment, net 145,986 144,346
------------------- -------------------
Total assets $ 193,134 $ 227,512
=================== ===================
Liabilities and Owner's Equity Current liabilities:
Accounts payable and accrued expenses $ 8,799 $ 3,664
Current maturities of capital leases 4,151 1,486
Current maturities of long-term debt 12,209 10,942
--------------- -------------------
Total current liabilities 25,159 16,092
Capital leases payable, net
of current portion 13,013 2,588
Long-term debt, net of current portion 42,530 54,740
----------------- -------------------
Total liabilities 80,702 73,420
----------------- -------------------
Owner's equity:
Owner's capital 112,432 154,092
----------------- -------------------
Total owner's equity 112,432 154,092
----------------- -------------------
Total liabilities and
owner's equity $ 193,134 $ 227,512
================= ===================
The accompanying notes are an integral part of
these financial statements.
<PAGE>
Marvin Dees, M.D.
Statements of Operations
for the years ended December 31,
1996 1995
------------------ ------------------
Net medical revenue $ 406,195 $ 445,822
Operating costs 227,253 205,051
------------------ ------------------
Operating margin 178,942 240,771
Depreciation and amortization 29,402 25,305
General and administrative expenses 34,339 38,560
------------------ ------------------
Income from operations 115,201 176,906
Interest expense 6,738 8,729
------------------ ------------------
Net income $ 108,463 $ 168,177
================== ==================
The accompanying notes are an integral part of
these financial statements.
<PAGE>
Marvin Dees, M.D.
Statements of Changes in Owner's Equity
for the years ended December 31, 1996 and 1995
Owner's
Equity
---------------
Balance, January 1, 1995 $ 179,702
Net income 168,177
Owner's draws (193,787)
---------------
Balance, December 31, 1995 154,092
Net income 108,463
Owner's draws (150,123)
---------------
Balance, December 31, 1996 $ 112,432
===============
The accompanying notes are an integral part of
these financial statements.
<PAGE>
Marvin Dees, M.D.
Statements of Cash Flows
for the years ended December 31,
<TABLE>
<S> <C> <C>
1996 1995
------------------ ------------------
Operating activities:
Net income $ 108,463 $ 168,177
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization 29,402 25,305
Changes in operating assets and liabilities:
Accounts receivable 2,194 9,050
Accounts payable and accrued expenses 5,135 95
------------------ ------------------
Cash provided by operating activities 145,194 202,627
------------------ ------------------
Investing activities:
Purchases of property and equipment (15,697) (25,281)
------------------ ------------------
Cash used by investing activities (15,697) (25,281)
------------------ ------------------
Financing activities:
Repayments on capital leases (2,255) (1,332)
Repayments on long-term debt (10,943) (9,808)
Owner's draws (150,123) (193,787)
------------------ ------------------
Cash used by financing activities (163,321) (204,927)
------------------ ------------------
Net decrease in cash and cash equivalents (33,824) (27,581)
Cash and cash equivalents, beginning of year 33,824 61,405
------------------ ------------------
Cash and cash equivalents, end of year $ - $ 33,824
================== ==================
================== ==================
Supplemental cash flow information:
Cash paid for interest $ 6,738 $ 8,729
================== ==================
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
MARVIN DEES, M.D.
NOTES TO FINANCIAL STATEMENTS
Note 1. Significant Accounting Policies
Organization - Marvin Dees, M.D. is the sole owner of Marvin Dees, M.D. (the
"Practice") located in New Ellenton, South Carolina. The Practice operates a
family practice medical office that provides treatments on an outpatient basis
for medical conditions not involving an immediate threat to life.
The financial statements have been prepared solely from the accounts of the
Practice and do not include the personal accounts of the owner or those of any
other activities in which he may be engaged. Management makes estimates that are
a necessary part of the preparation of financial statements. These estimates
include the useful lives of equipment, some of which is subject to technological
obsolescence, and the net realizable value of patient accounts receivable. At
December 31, 1996, management is not aware of any conditions that could
significantly affect the estimates employed in the preparation of the financial
statements.
Accounts Receivable - Accounts receivable represents amounts due from patients,
employers and various third-party payors. Provisions for uncollectable amounts
are made based on management's estimates of future collectability and historical
payment percentages.
Property and Equipment - Property and equipment is reported at cost.
Depreciation for financial reporting purposes is computed using accelerated
methods for furniture and equipment and by the straight-line method for
buildings. Estimated useful lives range from five to seven years for equipment
and 19 years for buildings. Depreciation expense includes the amortization of
capital lease assets. Maintenance, repairs and the cost of minor equipment are
charged to expense. Major renewals or betterments, which prolong the life of the
assets, are capitalized. Upon disposal of depreciable property, the asset
accounts are reduced by the related cost and accumulated depreciation. The
resulting gains and losses are reflected in the statements of operations.
Income Taxes - The Practice operates as a sole proprietorship. Under this
election, the revenues and expenses of the Practice are reported on the owner's
personal income tax returns. Accordingly, the accompanying financial statements
have no provision for income tax expense.
Cash Equivalents - The Practice considers all short-term debt instruments with a
maturity of three months or less at the date of acquisition to be cash
equivalents.
Supplemental disclosure of non-cash financing and investing activities: During
1996, the Practice placed into service certain medical equipment and furniture
totaling $15,345 acquired under capital leases.
Fair Value of Financial Investments - The fair value of accounts receivable and
accrued expenses payable are estimated by management to approximate their
respective carrying values. Management estimates the fair value of long-term
debt approximates its carrying value because the interest rate is similar to
that presently offered in the marketplace for credit instruments having the same
risk profile and term to maturity.
Note 2. Description of Leasing Arrangements
The Practice leases certain medical equipment under capital leases expiring on
various dates through August, 2001. At the end of the lease terms, the Practice
is generally transferred title to the leased equipment. In some cases, the
payment of a fee representing residual value is required.
<PAGE>
Included in property and equipment are the following assets held under capital
leases:
1996 1995
------------------- ------------------
Office and medical equipment $ 21,945 $ 6,600
Less, accumulated amortization 8,528 4,699
------------------- ------------------
$ 13,417 $ 1,901
=================== ==================
The following is a schedule by years of the future minimum lease payments under
capital leases together with the present value of the net minimum lease payments
as of December 31, 1996:
1997 $ 5,929
1998 5,031
1999 4,069
2000 4,069
2001 2,713
-----------------
Total minimum lease payments 21,811
Less amounts representing interest 4,647
-----------------
Present value of net minimum lease payments 17,164
Less current portion of lease obligations 4,151
-----------------
Capital lease obligations $ 13,013
==================
Note 3. Property and Equipment
At December 31, 1996 and 1995, property and equipment consisted of the
following:
1996 1995
----------------- ------------------
Land $ 29,513 $ 29,513
Building 135,249 130,361
Furniture and equipment 151,644 125,490
Vehicle 21,000 21,000
----------------- ------------------
337,406 306,364
Accumulated depreciation 191,420 162,018
----------------- ------------------
Property and equipment, net $ 145,986 $ 144,346
================= ==================
Note 4. Long-term Debt
The Practice's long-term debt at December 31, 1996 and 1995, follows:
1996 1995
----------- ------------------
Note payable to financial institution in
monthly installments of $1,469, including
interest at 11%, through November, 2000.
Collateralized by a mortgage on real estate. $ 54,739 $ 65,682
Less current portion 12,209 10,942
----------- ------------------
$ 42,530 $ 54,740
=========== ==================
<PAGE>
The aggregate maturities of long-term debt as of December 31, 1996 are as
follows:
Maturing during the year ended December 31,
1997 $ 12,209
1998 13,622
1999 15,198
2000 13,710
------------------
$ 54,739
==================
Note 5. Retirement Plan
The Practice sponsors a trusteed profit sharing retirement plan covering
substantially all employees. Under the plan, employees age 21 or older that work
a minimum of 1,000 hours are permitted to participate. Employer contributions to
the plan are discretionary. Employee contributions are not permitted. During the
years ended December 31, 1996 and 1995, expense of the profit sharing plan was
$0 and $1,211, respectively.
Note 6. Related Party Transactions
The owner participates in the medical activities of Practice. All payments for
services and benefits to the owner are recorded as draws and are not included in
cost of operations in the financial statements. For the periods ended December
31, 1996 and 1995, owner's draws totalled approximately $150,000 and $194,000,
respectively.
Note 7. Concentration of Credit Risk
In the normal course of providing health care services, the Practice extends
credit to patients in its service area without requiring collateral. Each
individual's ability to pay balances due the Practice is assessed and reserves
are established to provide for management's estimate of uncollectable balances.
Future revenues of the Practice are largely dependent on third-party payors and
include Medicare and private insurance companies. The amount of loss the
Practice would incur in the event of non-payment by the counter party is the
amount of the patient billing.
Note 8. Subsequent Event
On October 31, 1997, UCI Medical Affiliates of South Carolina, Inc. ("UCI")
acquired the accounts receivable, certain office and medical equipment and
substantially all of the Practice's intangible assets (including patient lists
and goodwill) for $279,168. The price paid consists of $85,000 in restricted
common stock, two notes payable totalling $159,536, certain assumed lease
liabilities totalling $17,164, and cash of $17,468. UCI also entered into a five
year lease agreement to rent the Practice's office space for $19,200 annually.
Dr. Dees entered into a five-year physician services agreement to provide, on
average, forty hours per week of physician services.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Combining Balance Sheet
September 30, 1997
(Unaudited)
The following pro forma combining balance sheet is based on the individual
balance sheets of UCI Medical Affiliates, Inc. as of September 30, 1997 per the
Company's Annual Report and Marvin Dees, M.D. as of December 31, 1996 appearing
in Item 7(a) of this filing. The information has been prepared to reflect the
acquisition by UCI Medical Affiliates, Inc. of Marvin Dees, M.D. after giving
effect to the pro forma adjustments described in Note 1. This statement should
be read in conjunction with each entity's financial statements and footnotes.
<TABLE>
<S> <C> <C> <C> <C>
UCI Medical
Affiliates,
Inc. Marvin Dees, Pro Forma Pro Forma
M.D. Adjustments Combined
-------------- -------------- --------------- ---------------
Assets
Cash and cash equivalents $ 14,676 $ -- $ $ 14,676
Accounts receivable, net 5,943,884 47,148 -- 5,991,032
Medical supplies inventory 502,888 -- -- 502,888
Deferred taxes 334,945 -- -- 334,945
Prepaids and other assets 579,217 -- -- 579,217
-------------- -------------- --------------- ---------------
Total current assets 7,375,610 47,148 7,422,758
Property, plant and equipment, net
4,002,699 145,986 (96,830) (a.) 4,051,855
Deferred taxes 1,417,237 -- -- 1,417,237
Goodwill 7,801,607 -- 182,864 (a.)
(12,190) (b.) 7,972,281
Other assets 266,379 -- 266,379
============== ============== =============== ===============
Total assets $ 20,863,532 $ 193,134 $ 73,844 $ 21,130,510
============== ============== =============== ===============
Liabilities and Capital
Current portion - long-term debt $ 840,879 $ 16,360 $ (12,209) (a.) $ 845,030
Current long- debt to employees 177,445 -- 42,500 (a.) 219,945
Accounts payable 2,039,506 8,799 (8,799) (a.)
17,468 (a.) 2,056,974
Accrued payroll 959,068 -- -- 959,068
Other accrued liabilities 437,667 -- (15,000) (c.)
9,100 (e.)
5,000 (d.) 436,767
-------------- -------------- --------------- ---------------
Total current 4,454,565 25,159 38,060 4,517,784
liabilities
Long-term debt, net of current 6,438,655 55,543 (42,530) (a.) 6,451,668
Non-current debt to employees 481,815 -- 117,036 (a.) 598,851
-------------- -------------- --------------- ---------------
Total liabilities 11,375,035 80,702 112,566 11,568,303
-------------- -------------- --------------- ---------------
Common stock 287,248 -- 1,511 (a.) 288,759
Paid-in capital 15,435,535 -- 83,489 (a.) 15,519,024
Accumulated earnings (deficit) (6,234,286) 112,432 (112,432) (a.)
(11,290) (f.) (6,245,576)
-------------- -------------- --------------- ---------------
Total capital 9,488,497 112,432 (38,722) 9,562,207
============== ============== =============== ===============
Total liabilities and capital $ 20,863,532 $ 193,134 $ 73,844 $ 21,130,510
============== ============== =============== ===============
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining Balance Sheet
September 30, 1997
(Unaudited)
1. The pro forma combining balance sheet has been prepared to reflect the
acquisition of Marvin Dees, M.D. by UCI Medical Affiliates, Inc. for an
aggregate price of $279,168. The purchase occurred on October 30, 1997. The
combining balance sheet reflects the balances of UCI at September 30, 1997 and
Marvin Dees, M.D. at December 31, 1996. Pro forma adjustments are made to
reflect:
(a.) The assets acquired consisted of: The purchase price consisted of:
$ 47,148 Accounts receivable $ 1,511 Common stock
49,156 Furniture, equipment 83,489 Additional paid-in-capital
182,864 Goodwill 159,536 Notes payable issued
-------- 17,161 Lease liabilities assumed
$ 279,168 17,468 Cash paid at closing
======== --------
$ 279,168
========
Issuance of 30,223 shares of restricted common stock valued at $85,000, an
estimated per share value of $2.81. Cash paid at closing is recorded in accounts
payable.
Certain property and equipment ($96,830) was not acquired. Accounts payable
($8,799), long-term debt ($54,739), and prior owner's equity ($112,432) were not
assumed.
(b.) Excess of acquisition cost over the fair values of net assets acquired
(goodwill) less one year's amortization. ($182,864 goodwill less $12,190
amortization)
(c.) Net decrease in fees for physician services is $15,000 annually, based
on the physician's service agreement compared to the acquired practice's owner's
draws.
(d.) Net increase in rental expense for office facilities is $5,000
annually, based on the rental agreements executed between the parties.
(e.) First year increase in interest costs of $9,100. Computed using
contractual interest rates on notes payable of $159,536 issued to the acquired
practice's owner at closing.
(f.) Effects of pro forma adjustments on statement of operations, closed
into pro forma retained earnings.
<PAGE>
UCI Medical Affiliates, Inc.
Pro Forma Statement of Operations and Accumulated Deficit
for the year ended September 30, 1997
(Unaudited)
The following pro forma combining statement is based on the individual
statements of operations and accumulated deficit of UCI Medical Affiliates, Inc.
as of September 30, 1997 per the Company's Annual Report and Marvin Dees, M.D.
as of December 31, 1996 appearing in item 7(a) of this filing. The information
has been prepared to reflect the acquisition by UCI Medical Affiliates, Inc. of
Marvin Dees, M.D. after giving effect to the pro forma adjustments described in
Note 1. This statement should be read in conjunction with each entity's
financial statements and footnotes.
<TABLE>
<S> <C> <C> <C> <C>
UCI Medical Marvin Dees, Pro Forma Pro Forma
Affiliates, Inc. M.D. Adjustments Combined
---------------- -------------- --------------- -----------------
Revenue $ 27,924,772 $ 406,195 $ -- $ 28,330,967
Operating costs 26,466,294 227,253 (15,000) (a.)
150,123 (e.)
5,000 (c.) 26,833,670
---------------- -------------- --------------- -----------------
Operating margin 1,458,478 178,942 (140,123) 1,497,297
General and administrative
expenses 153,445 34,339 -- 187,784
Depreciation and amortization 1,250,349 29,402 12,190 (b.) 1,291,941
---------------- -------------- --------------- -----------------
Income from operations 54,684 115,201 (152,313) 17,572
Interest expense, net (812,749) (6,738) (9,100) (d.) (828,587)
Gain on equipment 8,809 -- -- 8,809
---------------- -------------- --------------- -----------------
Income before income tax (749,256) 108,463 (161,413) (802,206)
Income tax benefit 665,530 -- -- 665,530
---------------- -------------- --------------- -----------------
Net (loss) income (83,726) 108,463 (161,413) (136,676)
Accumulated deficit - beginning
of year (6,150,560) 154,092 (112,432) (6,108,900)
Distribution to stockholders -- (150,123) 150,123 --
---------------- -------------- --------------- -----------------
Accumulated deficit - end of
year $ (6,234,286) $ 112,432 (123,722) $ (6,245,576)
================ ============== =============== =================
Net income (loss) per common
and common
equivalent share $ (.02) (f.) -- $ (.03)
================ ============== =============== =================
Weighted average common shares
outstanding 5,005,081 (f.) -- 5,035,304
================ ============== =============== =================
</TABLE>
<PAGE>
UCI Medical Affiliates, Inc.
Note to Pro Forma Combining
Statement of Operations and
Accumulated Deficit for the
year ended September 30, 1997
(Unaudited)
1. The above statement gives effect to the following pro forma adjustments
necessary to reflect the acquisition outlined in Note 1. to the pro forma
balance sheet:
(a.) Net change in physician salary computed based on employment agreement
compared with the Practice's former owner's draws. Does not include any
potential fees or productivity or other incentives provided for in
employment contract between the owner of Marvin Dees, M.D. and UCI
Medical Affiliates, Inc.
(b.) Addition for amortization of goodwill on a straight line basis over 15
years.
(c.) Net increase in rental expense for office facilities based on rental
agreements executed between the parties.
(d.) First year increase in interest costs, related to notes payable issued
to Dr. Dees.
(e.) Reclassification of owner's draws to compensation expense per
employment agreement.
(f.) Not applicable; Marvin Dees, M.D. was a sole proprietorship entity.
<PAGE>
SIGNATURES
Pursuant to the requirements of The Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UCI Medical Affiliates, Inc.
(Registrant)
/s/ Marion F. McFarland, III, M.D. /s/ Jerry F. Wells, Jr.
Marion F. McFarland, III, M.D. Jerry F. Wells, Jr., CPA
President, Chief Executive Officer and Executive Vice President of
Chairman of the Board Finance and Chief Financial Officer
Date: January 7, 1998
